Combine all ingredients in heavy medium saucepan. Bring to boil over medium heat, stirring occasionally. Reduce heat to medium-low and simmer until reduced to 1 1/2 cups, about 20 minutes. Season sauce to taste with salt and pepper. Cool slightly. Transfer to bowl. Cover and refrigerate. (Can be made 2 weeks ahead; keep refrigerated.)
*Smoke-flavored liquid seasoning is available at specialty foods stores and many supermarkets.